This Is A Good Guess Of What The Fed Will Do Today

We don't think the FOMC will 'taper' its bond purchases today (why risk volatility in illiquid year-end markets?) but we do expect a very strong hint that the move is coming in January and I also think tapering is now 90% priced in to asset markets (see note I sent out last night). There is a press conference after the meeting and that allows for hints on changes to the forward guidance framework, as well as a chance to reinforce the familiar 'tapering is not tightening' message. The Fed does not want to see market volatility when the taper is finally announced. And while the rise in longer-dated yields since May simply reflects economic reality, I expect an attempt to prevent any further significant rise in yields from here, for now.